Book review: Investing made easy
(MoneyWatch) I'm a big fan of fellow CBS MoneyWatch blogger Larry Swedroe's writing on investing, and I agree with the investing strategies that he advocates. So I was excited to learn about his new book, "Think, Act, and Invest Like Warren Buffet: The Winning Strategy to Help You Achieve Your Financial and Life Goals." Actually, a more descriptive title might be "Think, Act, and Invest Like Larry Swedroe: Invest With Peace of Mind Knowing You're Doing the Best You Can," but I admit that my title doesn't have quite the marketing edge that his does.
The first thing I like about Swedroe's book is that it's easy to read and is short at just 134 pages. There are no complicated graphs and charts, but there are several insightful sketches from Carl Richards, The New York Times blogger, illustrator and author of "The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money."
Swedroe believes that there can be simple solutions to such a complex subject as investing. In the book, he describes Warren Buffet's investing philosophy using quotes from the famous investor such as, "So many investors, brokers and money managers hate to admit it, but the best place for the average retail investor to put his or her money is in index funds."
Swedroe says your first investing step should be to develop a financial plan to meet your life goals. Then you should decide how much investing risk you can afford to take, which will translate into a risk-appropriate asset allocation between stocks, fixed income and alternative investments, such as real estate or commodities. The next step is to select low-cost index funds to implement your desired asset allocation. His book offers easy-to-understand instructions and sample portfolios to help you execute these tasks.
Then go enjoy life! You don't need to spend hours anguishing over buying and selling stocks and bonds or watching the financial news every evening to keep track of the market. What you should do is periodically review your investments to see if it's time to re-balance your portfolio or when subsequent events in your life would call for changing your financial plan.
Swedroe's short book fills in enough details so you can implement the strategies that he advocates on your own. For those readers who still need to work with a financial advisor, he provides some insightful tips for shopping for a financial advisor who is qualified and will have your best interests at heart.
And for those people who don't want to read all 134 pages, Swedroe ends with a short nine-page section that basically summarizes the book by outlining his "30 Rules of Prudent Investing."
I've already recommended his book to numerous friends and relatives, and I'm recommending it to you, too, so you can invest with peace of mind and knowing that you're doing the best you possibly can.
